Quarterly Financial Statements

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Missouri Basin Municipal Power Agency d/b/a Missouri River Energy Services Western Minnesota Municipal Power Agency Combined Statements of Net Position (Unaudited) June 30, 2017 and 2016 June 30 Assets:

2017

June 30 2016

Liabilities and Net Position:

2017

Western Minnesota Municipal Power Agency

2016

Current Assets: Current Liabilities:

Cash and cash equivalents: Restricted Unrestricted Total cash and cash equivalents

Missouri River Energy Services

$ 37,531,637 $ 60,008,551 12,429,640

8,665,824

49,961,277

68,674,375

111,933,886

104,716,051

Accounts Payable Accrued taxes

$ 34,107,190

$ 32,522,101

3,253,470

1,874,045

Short-term investments: Restricted Unrestricted

53,060,001

42,253,356

164,993,887

146,969,407

Accounts receivable

21,400,919

22,446,740

Advances to Missouri Basin Power Project

31,060,492

20,900,121

1,100,164

1,085,127

173,911

173,911

1,104,852

1,080,564

269,795,502

261,330,245

Total short-term investments

Fuel stock Materials and supplies Other current assets Total Current Assets

Current maturity of revenue bonds

10,120,000

11,095,000

Accrued interest

14,044,248

14,310,150

61,524,908

59,801,296

571,839,143

586,047,906

38,707,694

37,906,056

380,637

—

7,302,905

12,171,508

Total Non-Current Liabilities

618,230,379

636,125,470

Total Liabilities

679,755,287

695,926,766

219,765,734

180,136,266

$ 899,521,021

$ 876,063,032

Total Current Liabilities

Non-Current Liabilities:

Non-Current Assets: Long-term investments: Restricted

35,713,579

Unrestricted

60,199,457

57,664,811

95,913,036

137,452,424

Total long-term investments

Current liabilities payable from restricted assets:

79,787,613

Revenue bonds, net of unamortized debt discount and premium and excluding current maturities Revenues collected for future costs

Capital assets: Utility plant in service

499,649,462

495,165,628

Less-accumulated depreciation

241,957,819

239,685,869

Net utility plant in service

257,691,643

255,479,759

264,685,023

211,717,027

522,376,666

467,196,786

Advances for mine development

2,242,884

2,646,609

Unamortized debt expense

3,506,895

3,780,817

Other non-current assets

5,686,038

3,656,151

Construction work in progress Net capital assets

Total Assets

$ 899,521,021 $ 876,063,032

Other non-current liabilities Unearned revenue

Net Position Total Liabilities and Net Position

Quarterly Financial Statements As of June 30, 2017

Management Discussion The Combined Statements of Net Position and Statements of Revenues, Expenses, and Changes in Net Position for the periods ended June 30, 2017, and 2016, are included for those interested in the operations of the Missouri Basin Municipal Power Agency d.b.a. Missouri River Energy Services (MRES) and the Western Minnesota Municipal Power Agency (WMMPA). These statements should be read in conjunction with the 2016 Annual Report. LONG-TERM POWER SALES Long-term sales revenue for the six months ended June 30, 2017, totaled $84.7 million, which is 18 percent more than the $71.8 million during the same period in 2016. The average rate for long-term power sales was approximately 5.8 cents per kilowatt-hour (kWh) for the six months ended June 30, 2017, compared to the 5.7 cents per kWh for the six months ended June 30, 2016, an increase of three percent. The increase in revenue is largely due to serving the entire demand and energy requirements in excess of purchases from the Western Area Power Administration (WAPA) for Marshall, Minn., beginning in July 2016. Prior to July 2016, MRES was only serving a portion of the demand and energy in excess of WAPA purchases.

OPERATING EXPENSES Fuel expense for the six months ended June 30, 2017, was five percent lower than the same period in 2016 due to a decrease in average cost per MWh at Laramie River Station and lower generation. Other power supply operations and maintenance expenses of $52.8 million were 17 percent higher during the six months ended June 30, 2016, than the prior year, primarily due to higher purchased-power expenses. The higher purchased-power expenses were due to higher MWh purchases and higher market prices. Transmission operations and maintenance expenses during the six months ended June 30, 2017, were three percent more than the prior year, largely due to higher costs for transmission of electricity by others. NON-OPERATING REVENUES (EXPENSES) The investment income for the six months ended June 30, 2017, was ten percent higher than the same period in 2016 due to an increase in investment yields. Interest expense for the six months ended June 30, 2017, decreased compared to the same period in the prior year due to the regularly scheduled principal payments.

SHORT-TERM POWER SALES

CHANGE IN NET POSITION

Short-term power sales revenue for the six months ended June 30, 2017, totaled $5.2 million, which is higher than the $4.4 million during the same period in 2016. The increase in short-term power sales is due to the increase in the market price and megawatt-hours (MWh) sold for the first six months of 2017.

The change in net position for the six months ended June 30, 2017, was approximately $18.7 million compared to approximately $9.8 million for the same period in 2016. The year-to-date change in net position is $10.3 million higher than budgeted. The increase in net position compared to 2016 was largely due to higher long-term power sales to Marshall, Minn., offset by higher purchased power expense. The favorable variance in the year-to-date June 30, 2017 change in net position compared to budget is largely due to lower purchased power, fuel and LRS boiler maintenance expense offset by lower long-term and short-term power sales.

TRANSMISSION SERVICE REVENUE Transmission service revenue for the six months ended June 30, 2017, totaled $28.6 million, 15 percent higher than the $24.8 million during the same period in 2016. The higher revenue in 2017 was largely due to higher transmission costs paid to others and passing these costs along to MRES members.

Missouri Basin Municipal Power Agency d/b/a Missouri River Energy Services Western Minnesota Municipal Power Agency Combined Statements of Revenues, Expenses and Changes in Net Position (Unaudited) For the Periods Ending June 30, 2017 and 2016 Six Months Ended June 30 2017

2016

Operating Revenues: Long-term power sales

$ 84,701,403 $ 71,785,440

Short-term power sales

5,248,943

4,359,149

Transmission services

28,600,837

24,801,617

Other operating income

2,623,379

3,128,568

Total Operating Revenues

121,174,562 104,074,774

Operating Expenses: Fuel Other power supply operation and maintenance Depreciation and amortization Transmission operation and maintenance Customer information and collections

9,926,579

10,404,324

52,839,139

45,099,141

4,413,089

4,373,474

17,654,936

17,219,372

110,682

89,971

Administrative and general

5,725,119

5,750,816

Property taxes

2,781,456

1,750,104

93,451,000

84,687,202

27,723,562

19,387,572

Investment income

1,556,201

1,413,618

Other income

3,454,331

3,672,817

(1,699,243)

(1,570,676)

Total Other Operating Expenses Operating Income Non-Operating Revenues (Expenses):

Other expense Interest expense

(14,044,248) (14,310,150)

Amortization of financing related costs, premium and discount

1,825,503

1,846,997

Amortization of reserves previously collected

2,532,634

2,532,634

Principal in excess of depreciation and amortization

(2,683,131)

(3,211,529)

Total Non-Operating Expenses

(9,057,953)

(9,626,289)

Net Costs recoverable in (for) future years:

Change in Net Position

$ 18,665,609 $ 9,761,283